Currently, the Small Business Administration (SBA) and the Department of Veterans Affairs (VA) operate procurement programs for Service-Disabled Veteran-Owned Small Businesses (SDVOSBs). The SBA hears challenges to SDVOSB status decisions for all agencies other than VA. In contrast, VA verifies all potential SDVOSB companies applying for special procurement preferences for VA contracts. The process is cumbersome and expensive. Moreover, differences in the definitions, processes and interpretation between the agencies cause inconsistent decisions as to which firms qualify for contracts. A SDVOSB can qualify at one agency and not another for procurement preferences. This inconsistency often adds cost, confusion, and opens the door to fraud. This legislation transfers the VA verification process for firms to SBA, unifies the definitions of SDVOSB and Veteran-Owned Small Business (VOSB), and adds transparency and predictability to the process by creating an appellate process by which a SDVOSB can challenge an agency decision.

“Service-disabled veteran small business owners have paid a hefty price for our nation, and the least we can do is ensure that programs intended to encourage entrepreneurship do not themselves become yet another obstacle to success,” said Rep. Coffman. “Many of the certification, appellate, and excessive cost problems at the VA have been well-documented by veterans, and even by the Government Accountability Office. It’s past time to create a clear and transparent set of rules and processes for the government to follow on behalf of service-disabled veteran-owned small business contractors.”

In addition to being a Member of the Small Business Committee, Rep. Coffman is Chairman of the Veterans’ Affairs Subcommittee on Oversight and Investigations. This legislation is cosponsored by House Small Business Chairman Sam Graves (R-MO), Oversight and Government Reform Subcommittee on Government Operations Ranking Member Rep. Gerry Connolly (D-VA), House Veterans Affairs Committee Chairman Jeff Miller (R-FL), Veterans Affairs Subcommittee on Economic Opportunity Chairman Bill Flores (R-TX), and Small Business Subcommittee on Contracting and Workforce Chairman Richard Hanna (R-NY).

“I want to thank Rep. Coffman for taking the lead on this important legislation that will improve the way we verify SDVOSB and VOSB firms getting contracts from the VA,” said Chairman Graves. “As my Committee has found, the current system allows firms SBA would not certify to receive these contracts, taking away opportunity from legitimate veteran-owned companies. This is an important step to reducing fraud in SDVOSB contracting.”

"I am proud to join leaders of the Small Business and Veterans’ Affairs Committees to introduce this bipartisan, common sense legislation that will simplify and streamline the verification of SDVOSB and VOSB firms,” said Rep. Connolly (D-VA). “This is precisely the type of good government legislation Congress should be focusing on to protect veterans’ rights and strengthen veteran-owned small businesses in Virginia’s 11th District and across the country.”

“This bill will reform an excessive and redundant bureaucracy that’s making business even more complicated for the people it was meant to help,” said Chairman Miller. “By creating a single SDVOSB standard and cutting out needless red tape, we can ensure veteran business owners are properly recognized for their service, while reducing fraud and freeing up more resources for veteran support.”
Various veterans groups, including the Vietnam Veterans of America, and VET-Force (Veterans Entrepreneurship Task Force) strongly support this legislation.

Witnesses at a March 19, 2013 joint hearing with the Small Business Subcommittee on Contracting and Workforce and the Veterans’ Affairs Subcommittee on Oversight and Investigations highlighted problems from the different SBA and VA programs, pointing out that each agency often results in opposing decisions over which firms qualify.

Improving Opportunities for Service-Disabled Veteran-Owned Small Businesses Act of 2013:• Unifies the definitions of SDVOSB and VOSB. Rather than having different definitions of SDVOSBs, the proposed law will allow VA to determine when an individual is a Veteran or Service-Disabled Veteran, and entrust SBA with deciding whether a firm is a small business owned and controlled by a Veteran or Service-Disabled Veteran. This unified definition will reduce opportunities for fraud, since firms will no longer be able to say that they qualify under one definition but not the other.

• Creates an appellate process by which a SDVOSB can challenge an agency decision, adding transparency and predictability to the process.

• Requires that VA transfer its verification process for firms to SBA. The VA is currently spending about $33 million per year on these programs, and has over 120 full-time employees working on the process. Similar programs at SBA operate more efficiently with a fraction of the cost and personnel. This would provide SDVOSB and VOSB with better service while using taxpayer funds more efficiently.